 |
|
February 13, 2012
Binyamin Rose: Back to the Bunker: How a life-risking act by a Christian family during the Holocaust saved a family and built a thriving community a world away
Menachem Wecker: Business Schools Teach Real Estate Despite Troubled Housing Market
February 10, 2012
Lisa M. Krieger: Man with defibrillator demands access to his own heart's information
David G. Savage: Why activists may not be in a hurry to have High Court rule on alternative marriage
February 9, 2012
Laura McMullen: 10 Least Expensive Public Schools for Out-of-State Students
Kimberly Palmer: How to actually enjoy -- relaxing, financially -- your vacation
February 8, 2012
Warren Richey: Why momentous Prop. 8 ruling might not satisfy gay-rights groups
Menachem Wecker: Though Controversial, LL.M.'s Can Lead to Specialized Legal Jobs
The Kosher Gourmet byDana Velden: Going to the bother of making soup? You know it better be good. This CREAM OF TOMATO SOUP certainly is! And it's a cinch to make, too (Includes techinques and serving secrets)
February 7, 2012
Frank J. Gaffney, Jr.: Caught off-guard? President's Super Bowl interview with Matt Lauer gives those who need a reason not to vote for him, a darn good one
Suzanne Bohan: Leaping lizards! Tiny reptiles advancing robot design
February 6, 2012
Jonathan Tobin: Iran Threatens Israel With Destruction, But the New York Times Doesn't Hear It
Jeffrey Fleishman: In newly democratic Egypt, tens of democracy activists jailed, to stand trial; their groups are 'threatening the stability of the homeland'
Julie Deardorff : Researchers say antioxidants may not be that effective and could do more harm than good
Mark Clayton: How did Anonymous hackers eavesdrop on FBI and Scotland Yard?
February 3, 2012
Edmund Sanders : Israeli official says Iran is creating missile that could reach East Coast of US
Victoria Kim: Immigrant-smuggling ring used black drivers to avoid racial profiling
February 2, 2012
Jim Carney: Wrong number call may have saved her life
Reza Kahlili : Ex-CIA spy in Iran's Revolutionary Guard: What Obama doesn't grasp about striking deals with Tehran
Tina Susman: For woodchuck rescuer, every day is Groundhog Day
February 1, 2012
Brian Bennett: US officials see increasing threat of domestic attack from Iran
Emily Brandon: How to Take Advantage of New 401(k) Fee Disclosures
January 31, 2012
January 30, 2012
Paul Richter and Ramin Mostaghim: Misreading Teheran's limits -- deadly and economically devastating as they may be -- is a risk administration, Europe seem willing to take
Suzanne Bohan: Warning: Nap-deprived tots missing more than sleep, study finds
Meg Handley: Banks Revamping Rewards Programs to Woo Customers
January 27, 2012
Caroline B. Glick: Obama: Of course I intend to prevent a nuclear holocaust . . . in a few months
Yochonon Donn: In liberal New York City, fervently-Orthodox Jews may soon be getting a district to call their own
Jeannine Stein: An inflated ego and thinking you're 'all that' doesn't just make others sick of you, it can make you ill
Katy Hopkins: New budget rules may affect how much money you get for college
January 26, 2012
Ed Koch: To the New York Times, calling for the murder of Jews by those capable of having their incitement taken seriously isn't news
Jeannine Stein: Mental illness struck one in five U.S. adults in 2010: Report
January 25, 2012
Richard Simon: House passes two bills endorsing the use of religious symbols at military memorials
Fred Weir: Putin: Multiethnic Russia cannot survive as a US-style 'melting pot'; must find its own way
Susan Johnston: 5 Sneaky Coupon Strategies Consumers Should Watch Out For
January 24, 2012
Carol Clark: The price of your soul: How your brain decides whether to 'sell out'
Caroline B. Glick: America lost most in 'Arab Spring'. Sadly, many voters still don't grasp the extent
Warren Richey: Drug criminal scores win in GPS ruling from conservative-leaning high court
Erika Bolstad: Black conservatives gather to talk about gaining strength
January 23, 2012
Melissa Dribben: Jewish voters to play a key role in Florida's Republican primary
Jordan Rau: In quest to grow, Catholic hospital system will announce this morning its break from church
Ali Safi: U.S. envoy gives Taliban terms for peace talks
January 19, 2012
January 18, 2012
January 17, 2012
Frank J. Gaffney Jr.: No-kidding red lines: U.S. response to an Iranian nuke may be bluster, but Israel's won't be
David G. Savage: They sued their principals after slandering them online --- now the cases are headed to the Supreme Court
David Francis: Where to Invest in 2012: With stocks expected to rebound, opportunity abounds for investors
January 13, 2012
Ben Lynfield: Israeli lawmakers move to annex Jewish Judea, one museum at a time
Alexia Elejalde-Ruiz: Thriving through touch: Gentle massage helps older people with low mobility improve in mind and body
January 12, 2012
Warren Richey: Landmark Supreme Court ruling a 'resounding win' for religious groups
Warren Richey: Supreme Court says no to new rule on eyewitness testimony
John Fauber : Statins found to raise diabetes risk in postmenopausal women
Katy Hopkins : Consider This Before You Pay for an Online Degree
The Kosher Gourmet by Joseph Erdos: This mushroom and barley soup has an intense -- almost nutty -- flavor that mixes robust with Middle East. It has creaminess without cream
January 11, 2012
Shari Roan: Millions of atrial fibrillation sufferers at risk for devastating, but preventable, stroke
Tom Hussain: Pakistan -- recipient of more than $21 billion in civilian and military aid -- speeds pursuit of Iranian pipeline, defying US
David G. Savage: High court signals it won't be loosening TV's 'indecency' rules
Stephen Ceasar: Oklahoma's Islamic law amendment can't go into effect, court rules
January 10, 2012
Reza Kahlili: From an ex-CIA spy: US must exploit new split in Iran's Revolutionary Guard
Karen Kaplan: Study: Nicotine replacement products ineffective when used in real-life situations
January 9, 2012
Michael Doyle: Put through legal hell over dream home, couple fought back hard --- all the way to Supreme Court
|
| |
Jewish World Review
Dec. 11, 2008
/ 14 Kislev 5769
Creative destruction: Some businesses deserve to die and we're better for it
By
Jonathan V. Last
http://www.JewishWorldReview.com |
With all the talk of bailouts, it's worth remembering this cardinal truth: Some businesses deserve to die.
Creative destruction is the term Joseph Schumpeter used to describe the healthy evolution of economies as outmoded businesses are displaced by more efficient ones. Take, for example, the case of Blockbuster and Netflix.
We all know Blockbuster, which was founded in 1985 and became America's biggest video rental chain. Pre-Blockbuster, video stores were mostly mom-and-pop affairs, but Blockbuster introduced economies of scale and expanded aggressively.
At its height, Blockbuster owned more than 9,100 stores and commanded nearly half the U.S. video rental market. Its big profits prompted Viacom to purchase the business for $8.4 billion in 1994.
But markets change.
The DVD emerged as the successor to the VHS tape in the late 1990s. The movie studios wanted to keep the rental arrangement that had existed with VHS tapes. When a movie was first released on VHS, a single copy would cost about $120. This price was intentionally prohibitive, so that the only practical way for consumers to see a movie at home was to rent it.
Only after several months of release would the price be dropped to "sell-through," or about $20. In return for this window, Blockbuster gave the studios 40 percent of their rental revenues.
The executives at Blockbuster, however, demanded a greater percentage of the rental revenues from DVDs. It was a disastrous decision. In response, the studios adopted the sell-through model we know today: The day a DVD is made available for rent at Blockbuster, it is also available for purchase for about $20 from retailers.
While Blockbuster was foolishly forcing the movie studios to change the economics of movie rentals, a rival company emerged to change the delivery mechanism. In 1999, a little outfit called Netflix started charging users a flat monthly subscription fee and delivering DVDs by mail, allowing people to rent as many movies as they liked for as long as they wanted.
Netflix represented an immediate, existential threat to Blockbuster. The giant should have acquired or crushed the upstart. Indeed, a former executive told Variety in 2005 that Blockbuster had passed up an opportunity to purchase Netflix for $50 million. Blockbuster believed it could preserve its outmoded model even in the face of tectonic shifts in the market.
Netflix saw its subscriber base rocket from 239,000 in 1999 to 1.5 million in 2003. Today it stands at 8.7 million. The company's revenues went from $270 million in 2003 to $1.2 billion in 2007.
It took five long years just for Blockbuster to launch a copycat version of Netflix's DVD-by-mail system. By then it was too late. Beginning in 2001, Blockbuster took staggering losses for six years out of seven. It lost $1.2 billion in 2004 alone.
Eventually spun off from Viacom, Blockbuster's stock today hovers around $1 a share. Purchased just 14 years ago for $8.4 billion, Blockbuster now has a total market capitalization of $227 million.
And Netflix? It now has a market capitalization of $1.4 billion and growing. In nine short years, it destroyed Blockbuster and created a new mode of home-video delivery.
Yet Netflix is now intent on destroying its own business model and creating a more efficient one. In 2007, the company began streaming some of the movies in its library over the Internet.
Today Netflix has the most seamless digital-download system going. Subscribers can access 12,000 movies and TV shows to watch on their computers or televisions.
Digital downloading has long been thought of as the Holy Grail of home video. Instead of trying to protect its mail-order model against it, Netflix tackled the new technology head on.
It's not clear how streaming video will affect Netflix's DVD-by-mail business or its bottom line. But Netflix decided digital downloading is the future, and that if the company didn't embrace it, someone else would.
As for Blockbuster, its days are numbered.
When the behemoth finally breathes its last, should Congress bail it out? Because if the president-elect and the Democratic Congress are going to give handouts to every poorly managed concern suffering the effects of creative destruction, there's a line around the block of people who'd like some cash.
For instance, you may have noticed that the newspaper industry isn't doing so well. And this week the WNBA saw a franchise go bust. And ... well, let's not go giving anyone ideas.
Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.
Jonathan V. Last is a columnist for the Philadelphia Inquirer. Comment by clicking here.
Previously:
11/20/08 Time for perspective on election's numbers
11/13/08 Climbing back from calamity
11/03/08 Put aside candidates' faults and ponder their qualities
10/09/08 Regrettably, neither of the presidential hopefuls has a grasp on economic theory
09/22/08 Anti-abortion Democrats and global-warming Republicans are becoming increasingly important
09/09/08 On both sides, this year's political gatherings marked the start of changed strategies that have transformed the race
07/23/08 With policy shifts, Obama now seen as an ordinary pol
06/26/08 Bush failed to hold others responsible for their mistakes, and he let his admirable vice president do too much
02/18/08 GOP will unify as Obama and Clinton continue to vie
12/13/07 Fun begins as races tighten and shift
12/05/07 Iran's future: Would lower fertility rates lead to stability?
11/01/07 Nobel Prize in Economics — where Team USA still dominates the game
10/25/07 Handicapping the GOP's presidential horse race
10/11/07 Germany's Turks provide a lesson on immigration
09/13/07 British battle can offer us a perspective on casualties
09/12/07 Alas, GOP seems set to take hit in Senate
08/30/07 Europeans have supplanted backbones with capitulation
08/24/07 Politics holds the key to ensuring a healthy growth in population
08/17/07 Finessing the Democratic center
08/10/07 Woohoo! Satire seeing a revival
07/31/07 Historical model: For Obama, it's Carter
07/26/07 Baseball, apple pie, a 2nd chance
07/24/07 Harry Potter and the alchemy theory
07/06/07 Life is hard — and often short. The perils of professional wrestling
06/21/07 After Bush: Gingrich and others worry that his shortcomings could have a far-reaching effect on the GOP
03/09/07 Why the British outclass us in acting
01/23/07 Romney: Seriously great, but with baggage
12/23/06 When truth is transpicuous
12/05/06 A realistic plan: Split the country in two
11/08/06 We could easily pull out of Korea and let China have regional hegemony. But would it be the right thing?
10/24/06 The decline of revolution
10/18/06 Why the free market is king
08/07/06 Democracy, of itself, not solution to all problems
08/01/06 We get the movies we deserve
07/27/06 How long will U.S. empire last?
© 2006, The Philadelphia Inquirer. Distributed by McClatchy-Tribune Information Services.
|
|
Arnold Ahlert
Mitch Albom
Jay Ambrose
Michael Barone
Barrywood
Tony Blankley
Lori Borgman
Stratfor Briefing
Mona Charen
Linda Chavez
Richard Z. Chesnoff
Ann Coulter
Greg Crosby
Alan Douglas
Larry Elder
Suzanne Fields
Frank J. Gaffney
Bernie Goldberg
Jonah Goldberg
Julia Gorin
Jonathan Gurwitz
Paul Greenberg
Argus Hamilton
Victor Davis Hanson
Betsy Hart
Ron Hart
Nat Hentoff
Marybeth Hicks
David Horowitz
Jeff Jacoby
Renee James
Paul Johnson
Jack Kelly
Ed Koch
Ch. Krauthammer
Michael Ledeen
John Leo
David Limbaugh
Kathryn Lopez
Rich Lowry
Michelle Malkin
Jackie Mason
Ann McFeatters
Dale McFeatters
Dana Milbank
Jeanne Moos
Dick Morris
Jim Mullen
Deroy Murdock
Judge A. Napolitano
Bill O'Reilly
Kathleen Parker
Star Parker
Dennis Prager
Wesley Pruden
Tom Purcell
Sharon Randall
Robert Robb
Cokie & Steve Roberts
Heather Robinson
Pat Sajak
Debra J. Saunders
Martin Schram
Culture Shlock
David Shribman
Roger Simon
Michael Smerconish
Thomas Sowell
Ben Stein
Mark Steyn
John Stossel
Cal Thomas
Dan Thomasson
Bob Tyrrell
Ben Wattenberg
Diana West
Dave Weinbaum
George Will
Walter Williams
Byron York
ZeitGeist
Mort Zuckerman
Robert Arial
Chuck Asay
Baloo
Chip Bok
Dry Bones
Lisa Benson
John Branch
John Cole
J. D. Crowe
John Deering
Brian Duffy
Everything's Relative
Mallard Fillmore
Glenn Foden
Jake Fuller
Bob Gorrel
Joe Heller
David Hitch
Jerry Holbert
Lee Judge
Steve Kelley
Jeff Koterba
Dick Locher
Jimmy Margulies
Rick McKee
Michael Ramirez
Kevin Siers
Jeff Stahler
Ed Stein
Danna Summers
John Trever
Gary Varvel
Kirk Walters
Mr. Know-It-All
Dr. Peter Gott
GET A JOB! by Marty Nemko
Richard Lederer
Frugal Living
Tech Maven
On Nutrition
Bookmark These
Bruce Williams
|
